In what could have been the industry’s biggest deal ever, US President Donald Trump has issued a presidential order prohibiting SG-based semiconductor firm Broadcom from acquiring US-based firm Qualcomm.

The order stated it had “credible evidence” that if Singapore-based Broadcom were to acquire Qualcomm, it “might take action that threatens to impair the national security of the United States.”

It included a calculation that the US initiative in creating new technology for new-generation mobile phone communications would be lost to China if Singapore-based Broadcom took over San Diego-based Qualcomm.

Qualcomm is one of the biggest competitors with China’s Huawei Technologies Co in 5G technology development. A shift to Chinese dominance of 5G technology could tip the scales in the market significantly to China’s favour.

Continually Rebuffed

Singapore-based Broadcom has been trying to take over Qualcomm for the past few months, but has been continually rebuffed.

Earlier, it issued a US$117 billion bid for the takeover, but was rebuffed after the Committee on Foreign Investment in the United States (CFIUS) deemed the risk of the acquisition too high.

CFIUS cited Broadcom’s relationship with “third-party entities” as a major risk factor, though it did not explicitly mention the names of “Huawei” or “China” as part of the entities.

In his presidential order, Trump prohibited any form of merger or acquisition from Broadcom.

“The proposed takeover of Qualcomm by the Purchaser (Broadcom) is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited,” the order said.

This comes just months after Trump said Broadcom was “a really great, great, company”.

Broadcom’s next move?

Broadcom is currently in the process of trying to shift its headquarters from Singapore to the US, and the transition is planned to be completed by April 3rd.

While a presidential order cannot be appealed, Broadcom could leverage on its location in the US to argue CFIUS did not have jurisdiction over it as it was no longer a ‘foreign entity’.

However, Trump seems adamant that a takeover will not happen, so what happens remains to be seen.

In US history, only five deals have been blocked based on CFIUS objections.

Of these five, two came from Trump since he assumed office slightly over a year ago.